The National Association of Realtors (NAR), a trade association for the real estate industry, announced a massive settlement on Friday, which includes a rule change regarding how listing services collect commission that could dramatically change the costs associated with buying a home.
The new deal resolves a number of different antitrust suits against the group from home sellers alleging that the members of the NAR were using the Multiple Listing Service (MLS) cooperative compensation model rule to inflate commission costs, according to Reuters. The NAR announced that it would be paying $418 million to those affected over four years and would be instituting a new MLS rule prohibiting offers of broker compensation on the service, according to a press release from the group. (RELATED: Biden Wants To Spend Hundreds Of Billions Fighting Housing Affordability Crisis He Helped Create)
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” Nykia Wright, interim CEO of NAR, said in the press release. “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals.”
Despite the settlement, the NAR denies any wrongdoing and argues that offers of compensation in the MLS model help make professional representation more accessible and cheaper for average Americans, according to the press release. As part of the agreement, most NAR members were released from liability, and cooperative compensation remains an option for consumers who want to utilize it off the MLS.
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Opponents of the old rules argue that they raised housing prices and limited buyers’ ability to negotiate fees with their own agents or even not use an agent, according to Reuters. Analysts at TD Cowen estimate that the rule change could lower realtor commissions by 25% to 50% but could save thousands for home buyers.
The NAR was facing many suits nationally regarding the rule and even reached another settlement over four months ago in Kansas City that had the NAR and several other brokerages pay $1.78 billion on antitrust grounds, according to Reuters.
Average Americans have been increasingly struggling with housing unaffordability, as home prices in the 20 largest cities rose 6.1% year-over-year in December, up 5.4% from the previous month, marking the 11th month in a row that prices have risen to another record high. At the same time, the average interest rate for a 30-year mortgage has continued to stay elevated after peaking at nearly 8% in October.
The NAR referred the Daily Caller News Foundation to the press release.
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